Home MTA Economics Paying too much attention to fare-beating dollars

Paying too much attention to fare-beating dollars

by Benjamin Kabak

Hand-wringing over subway and bus fare-beaters seems to be one of those annual traditions in New York City. This year, with the City Council pressuring the MTA over its lack of dollars and authority board members seeking to squeeze out as much money as possible from as many sources as possible, those watching the watchers have been ramping up the anti-fare-beating rhetoric.

Recently, The Staten Island Advance has been beating this drum but with numbers pulled seemingly from thin air. They ran an informal poll that found 18.5 percent of bus riders skipping out on the fare and seemed to extrapolate losses of $328 million for the MTA due to such scofflaws. They repeated that figure in an article on the City Council questioning, but then they backtracked in an editorial. Their revised figure is $40 million systemwide which seems in line with the MTA’s public proclamations.

The made-up numbers are nearly besides the point. A Post article seemingly sets the record straight and notes that bus fare beaters cost the MTA around $14 million a year while subway turnstile-jumpers cost another $20 million or so annually. Considering how the MTA could restore all of their 2010 service cuts if they could capture the revenue, it sounds like a considerable sum, but it’s not.

In their 2012 adopted budget, the MTA projects over $3.6 billion in fares from New York City Transit services alone. Even if The Advance’s estimate of $40 million is correct, we are looking at a bleed rate of around 1.11%. Just about any business would kill for such a low rate, but with the MTA, it’s a problem that requires attention and a solution.

So just what solution are New York City politicos suggesting? Spending on more enforcement, of course. “We need additional police on buses to ensure fares are paid,” Council member Debi Rose said to The Advance. “The system is bleeding revenue because of fare-beaters.” She later added more rhetoric: “The system is hemorrhaging and we need to triage the situation and stop the loss of revenue wherever it occurs.”

In an ideal situation, the MTA would have a fare capture rate of 100 percent. And in an ideal world, the Second Ave. Subway would have been completed decades ago. With Council members advocating for more enforcement, we’re in a situation in which a solution is looking for a problem. After all, how much should the MTA or New York City spend to stem the fare-beating tide? Considering the low rates, would spending a dollar on more enforcement lead to a net increase in revenue or would the MTA be spending a dollar to capture a dollar?

It’s easy for politicians to take to their soap boxes in favor of something that sounds good. It’s harder to think through the problem in order to do the right thing. I don’t think fare-beating has a problem, and although I’m not going to advocate for hopping the turnstile, I question the need to spend much more to catch fare beaters. Targeted enforcement along problem bus lines as well as some smarter policies should do the trick just fine.

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BrooklynBus May 31, 2012 - 9:46 am

And why do you have so much faith in MTA estimates? Station agents used to keep track of fare evaders. Doesn’t it make sense that with less of them, the subway estimates would be less accurate? And how do they estimate the numbers entering the back doors of buses like the dozens of school students who do this routinely? Does the bus driver count them? Do the traffic checkers even count them? A few weeks ago a bus driver companies to me how the same individuals enter his bus through the front door every day and do not pay. He said he would be satisfied if they even threw in 50 cents. Who counts all these fare cheaters.

It is not in the MTA’s interest to tell the truth on this because it makes them look bad. The industry standard for fare evasion acceptance is 1%. Isn’t 1.11 % above 1%? Where should the MTA draw the line and start paying attention? I remember when I was a kid and the fare was 15 cents, the bus driver would not let you on with ten. You just had to walk.

Bolwerk May 31, 2012 - 10:18 am

Whatever the number, you don’t need wide-ranging surveillance to estimate it satisfactorily. Fairly elementary statistics can get an answer that is good enough for setting policy, like collection targets.

Andrew June 4, 2012 - 10:06 pm

It doesn’t make much sense for station agents to try to keep track of fare evasion. When they’re assisting customers, they can’t also keep a close eye on the turnstiles. And, obviously, station agents can’t track fare evasion at entrances without station agents.

Alon Levy June 4, 2012 - 4:41 pm

The industry standard for fare evasion acceptance is 1%.

Which standard is this, exactly? Certainly not one based on maximizing revenue and minimizing cost: POP systems like Zurich are happy with 2%, because going down from there would require spending too much on fare collection and enforcement.

Andrew June 4, 2012 - 10:03 pm

According to this article, the industry standard is 3%.

This one says 8-9%.

I can’t find any source for a 1% industry standard.

Alon Levy June 4, 2012 - 11:09 pm

In Vancouver, 5% fare evasion ($4 million per year) led Translink to decide to install faregates on Skytrain, at a cost of $100 million.

Jim D. May 31, 2012 - 10:32 am

According to several MTA bus operators who participate on various transit enthusiast boards, the percentage of passengers who do not pay is far higher than the authority acknowledges.

Andrew June 4, 2012 - 10:04 pm

Those bus operators only see what happens on their buses, not what happens systemwide. Fare evasion rates vary considerably from route to route (and from neighborhood to neighborhood).

Bolwerk May 31, 2012 - 10:39 am

We need more fare beating. Seriously. More fare beating, better enforcement, and higher fines means more revenue. It may be a shitty solution, but it’s less shitty than the current method of contriving excuses to fine sleepy subway riders for measly QoL violations.

Politicians who wring their hands about the fare beating problem without implementing a smarter way to recover the costs are just blowing smoke.

Larry Littlefield May 31, 2012 - 10:48 am

The police are not the MTA police. They are the New York City police. On whose side are these New York City politicians? The fare beaters or the other riders? And how about the other riders?

The only thing that stops fare beating is the hostility of other riders. By demonizing the MTA, the pols legimate fare beating, which leads to service cuts, which further legitimate fare beating, etc. That is the result of what they have done.

The MTA should threaten to shut down bus lines, and stations, where a substantial share of riders are not paying, and if necessary make good on their threats.

Bolwerk May 31, 2012 - 11:11 am

It’d be nice if they could just turn them into POP services. This notion of bus drivers doing collection is a distraction under ideal conditions, and perhaps puts driver safety at risk. Properly trained fare inspectors can at least in theory be more than just another victim, and either way they aren’t sitting ducks.

Of course, I suppose the legal framework to do that well isn’t there right now. Pols’ fault again.

SEAN May 31, 2012 - 10:51 am

Don’t these politicos have better things to do like restricting soft drink sizes? Sheesh!

UESider May 31, 2012 - 11:38 am

sounds like a lead-in to restoring the station agents…

MP May 31, 2012 - 2:58 pm

The fines are too low. The fine for jumping the turnstile should =(Estimated Total Lost Revenue/Expected Number Tickets Issued)+ $1.

This issue was discussed a few months back on Marginal Revolution or Volokh Conspiracy… The bottom line in economic terms is you are better off jumping the turnstile than buying a Metrocard, since you will be caught so infrequently.

Bolwerk May 31, 2012 - 5:07 pm

Why +$1? You need to account for enforcement overhead, like inspections and court costs. It’s analogous to the premium in an insurance policy.

MP May 31, 2012 - 9:44 pm

You are definitely right that you need to have a higher premium for the model I explained. I got slightly confused in using the +$1 because of the following:

The above formula seeks an arithmetic break-even for MTA. But you can look at this from the fare-jumper’s perspective, where the cost should be the anticipated number of jumps without paying times the fare plus one dollar. That behavioral perspective makes jumping irrational, and therefore incidents should go down.

I do prefer looking at it behaviorally, especially since it feels a little less heavy handed. On the other hand, since the theme today seems to be Bloombergian heavy-handedness, I suppose there would be more support for the MTA-side approach.

Spendmore Wastemore May 31, 2012 - 11:37 pm

Check that formula again, the probability of getting caught is already factored in. The cost of each ticket is going to be far more than $2.25; the formula means that fare jumpers would, in total, pay more in fines than they saved in fares.

One could add an upcharge for the cost of writing the ticket as well, though I don’t like that practice.

Bolwerk June 1, 2012 - 8:54 am

No, it’s not explicitly factored in (i.e., no enforcement target). If they only fine at the level where they don’t recover enforcement costs, the expected payout in fines is roughly equal to what you would pay in fares.

There is a sweet spot somewhere: you get enough evasion to recover evasion losses plus enforcement costs, which means not deterring evasion too much. I wasn’t kidding when I said we probably could use more evasion, but it needs to be combined with a better enforcement regime. Right now the main goal is punishing beaters, not recovering the costs – which I think punishes beaters more than we do now anyway.

SEAN May 31, 2012 - 5:04 pm

Like I said above regarding sodas.

Bolwerk May 31, 2012 - 6:23 pm

I don’t agree with the policy, but at least soda is realistically connected to what amounts to an obesity epidemic. It’s not like the bumblefuck moral crusade against alcohol (the health commish wants to ban happy hour too!) and minor drugs.

Jerrold May 31, 2012 - 9:26 pm

Smoking in public places is a legitimate target of public health activism because second-hand smoke is being breathed in by the people around you.
If I’m drinking a soda while I’m sitting next to you, the soda is going into ME. It’s not going into YOU.

What ALSO has occurred to me is that the restaurants and other places that sell sodas might just take advantage of the situation. They might reduce the largest SIZE drink to 16 oz., but NOT reduce the PRICE of it.

Bolwerk May 31, 2012 - 10:59 pm

It may be going into you, but it doesn’t stop there. When you become hypertensive or diabetic or whatever, your increased use of the healthcare system takes away scarce resources that could be used elsewhere. If you’re covered by medicaid/medicare, I’m helping pay for your care. If you’re not covered, you’re likely driving up everyone else’s private insurance. If you are covered, you’re still using resources that could be better focused on other things.

Basically, it’s pissing in the common stream. One little tinkle stream isn’t noticeable, but at this point the flood plain is covered with diuretic piss. I don’t think the soda restrictions really address the problem for various reasons, but I at least get where they’re coming from.

Eric F June 1, 2012 - 8:53 am

Fare beating is demoralizing to those whom pay their fares. There’s a cost to that is not necessarily reflected in lost revenue. Ever feel somewhat silly in hunting around and using a trash can in an area where the streets and sidewalks are strewn with litter? It’s kind of like that.

Bolwerk June 1, 2012 - 8:58 am

There is more than one parallel. It seems to me the same people who are against handling farebeating sensibly tend to be against handling litter sensibly too.

MaximusNYC June 1, 2012 - 10:55 am

It was interesting to ride the subways and streetcars in Berlin recently. There are no turnstiles… you buy your ticket at a machine on the platform (or on the streetcar) and when you’re ready to board, you “validate” it by getting a time and location stamp from another machine.

The system is enforced by auditors who periodically board and ask people to show their tickets. And it seems to work really well!

Maybe some of this is cultural — German people seem more disposed than Americans to following rules. There was almost no litter on the streets or in the stations, despite the relative lack of public trash cans.

Still, it was impressive to see stations with open entrances, unencumbered by turnstiles, with great crowd flow. In the week I was there, I saw auditors boarding trains once or twice, tho I was never asked to show my ticket. (I was also told by a local that I probably didn’t need to buy a ticket after 11pm, because there are very few auditors at that hour.)

Hard to say whether this would work here. You’d need a large staff of auditors, at least at first. But surely there would be tremendous savings from not having to maintain the turnstile infrastructure.

Andrew June 4, 2012 - 10:08 pm

That’s exactly how SBS works. It’s called POP.

I’d love to see it applied on the entire bus network, but that will have to wait until smartcards. I don’t know if it’s practical on the subway – perhaps it could be used to supplement the turnstiles.

ajedrez June 1, 2012 - 10:56 am

The question is what number of those fare evaders would’ve paid had there been better enforcement. What percentage would just walk or not make the trip? I’ve walked 3-4 miles to avoid paying a bus fare, so if it came down to it, I’m sure at least a good portion would do that as well.

Alon Levy June 4, 2012 - 11:17 pm

Just one extra point for this: stereotypical fare evaders are low-income, which means their value of time is low and thus they’ll walk longer distances to avoid paying a fare if riding for free is impossible.

Most likely, one can piece together decent elasticity figures by looking at multiple agencies’ evasion rates, and also at changes in evasion rates and ridership in response to policy changes, such as installing turnstiles, changing the price of season passes, ramping up POP enforcement, and changing the fine.

MTA, cops ramping up fare enforcement on Staten Island :: Second Ave. Sagas June 8, 2012 - 11:01 am

[…] in the back and straphangers hopping turnstiles have created some bad press, and while I think the problem is overblown from an economic standpoint, the MTA has been forced to respond from a public relations standpoint. […]

Bus fare evasion now a $50 million problem :: Second Ave. Sagas June 20, 2012 - 1:36 pm

[…] enforcement efforts, I’ve been firmly on the side of ignoring it. I think the media has spent all together too much time focusing on subway fare jumping as it is mostly just an inconvenience. Steeper fines are likely a […]


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